Groups representing apartment and real estate owners are suing to block a law prohibiting the eviction of tenants who cannot pay rent due to loss of income caused by coronavirus. (Kevin N. Hume/S.F. Examiner)

Groups representing apartment and real estate owners are suing to block a law prohibiting the eviction of tenants who cannot pay rent due to loss of income caused by coronavirus. (Kevin N. Hume/S.F. Examiner)

Real estate industry sues over coronavirus eviction ban

Real estate industry groups filed a lawsuit Monday seeking to undo a permanent eviction ban for those affected by coronavirus from being enacted.

The San Francisco Apartment Association, San Francisco Association of Realtors, Coalition for Better Housing and Small Property Owners of San Francisco Institute said Monday they filed litigation to challenge the legality of permanently banning evictions for rent not paid due to coronavirus. It also seeks a temporary restraining order to immediately stop the law passed earlier this month, which that took effect Friday.

The COVID-19 Tenant Protection Ordinance prevents landlords from evicting tenants for non-payment attributed to coronavirus but does not waive the rent owed. Landlords may pursue back rent through the courts if need be.

But real estate industry officials say the process takes years and are unconvinced landlords will recoup the costs.

“By purporting to prohibit evictions for nonpayment of rent, some renters will inevitably rely on the ordinance and will stop paying rent during the COVID-19 period without budgeting to eventually repay the amount of rent owed,” said Walt Baczkowski, president and CEO of the San Francisco Association of Realtors. “When this law is overturned, those renters will be in a tough position and housing providers will have no choice but to exercise their unlawful detainer rights in order to collect the unpaid rent.”

The lawsuit alleges that banning evictions is unconstitutional and violates state law.

Supervisor Dean Preston, who authored the law, said the suit is “disappointing” but thinks the law will hold up against “a weak legal argument.”

“I’m confident these protections will take effect,” Preston said. “I really question the judgment and motive of anyone suing to derail an eviction protection law in the middle of a pandemic. This is a time to be coming together on solutions.”

Preston introduced a package of housing legislation that includes a rent relief fund for small landlords with tenants who can’t make up the rent, as well as an affordable housing fund.

Between $100 million to $150 million in revenue for the legislation would be generated by a transfer tax on real estate transactions of $10 million or more, if voters approve a ballot measure in November.

Surveys conducted by the groups have found that 97 percent of tenants have continued to pay rent through the coronavirus crisis, but they note that small property owners tend to be more impacted.

An SFAA survey in May found that 17 percent of small property owners had at least one tenant who couldn’t pay rent and 71 percent of housing providers haven’t received any mortgage forbearance or deferment. It also found that 17 percent of housing providers have had tenants unexpectedly break the lease or given notice that they would move.

SFAA sees rent assistance as the most logical solution and has advocated for such while offering rent reductions and payment plans — sooner rather than later. Landlords are still contending with property taxes, mortgage, maintenance and utilities, the group noted.

“We think that there needs to be some sort of resolution right now and funding right now rather than the potential of funding later pending the will of the voter,” said Charley Goss of SFAA. ” It’s not that our members want to evict. It tends to be the most enforceable way for people to collect. Taking that off the table puts a lot of small property owners in a tough spot.”

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